CRYPTOTRIFECTA: Bitcoin, Ethereum, Dash

Cryptocurrency - a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.

Trifecta - a bet in which the person betting forecasts the first three finishers in a race in the correct order.

It was December 2013 when I jumped into the Bitcoin bandwagon. I signed up with Coinbase and started buying Bitcoins when it was trading at ~$800, right before it crashed to ~$600. It was a bummer. I lost a lot of money. But I knew what I was getting into. It was a risky bet on an early implementation of blockchain technology. I believed in the blockchain and its potential. So I never wavered and held on to my small stash of Bitcoins. I was in it for the long haul. I was a “hodler” before hodl became geekspeak for cryptogeeks.

In July 2014 a Turing-complete blockchain-based distributed computing platform called Ethereum went on presale. I recognized its potential to go above and beyond the Bitcoin blockchain. For me it was a no-brainer. I was late to jump into Bitcoin but I made sure to never miss the Ethereum blockchain train. Since then the price of Ethereum has gone up to ~$20 before it plunged due to the DAO fiasco in June 2016. It was a hard lesson for the Ethereum community. It resulted in a hard fork. Ethereum (ETH) and Ethereum Classic (ETC) blockchains now run in parallel. My Ether presale coins were in a quantum state. But I didn’t panic. I was in it for the long haul. May the better Ethereum blockchain win.

But all is not well in the world of Bitcoin. There is a raging debate on its scalability. There’s the Bitcoin Core camp and there’s the Bitcoin Unlimited camp. There’s a threat of a hard fork on the horizon. Both sides of the debate have valid strong technical points. But from a user perspective I lean more on the Bitcoin Unlimited side. Roger Ver makes an excellent point that Bitcoin scalability and transaction processing needs to be fixed, right here, right now. Segregated Witness (SegWit) and the Lightning Network are far from implementation. In the meantime, Bitcoin transactions are clogging and transaction fees are skyrocketing. If the SEC approves the Bitcoin Trust ETF, the Bitcoin network will attract more users, and investors, and explode in volume of transactions. Then the scaling problem will become a nightmare. Bitcoin Jesus is no longer happy with Bitcoin. I feel his pain. But that’s the problem with Bitcoin being the pioneer blockchain. It has limitations put in by design by its inventor, Satoshi Nakamoto, before scaling was a real issue. At the end of the day it is a problem of philosophical differences between stakeholders (miners, developers, investors). At the end of the day it boils down to the problem of governance. May the better Bitcoin blockchain win.

Meanwhile, a relatively new cryptocurrency jumped to the scene. Formerly known as DarkCoin, Dashcatapulted to the top 3 position in market capitalization. I immediately took interest and learn as much as I can about it in a short period of time. I’m impressed with what I saw. It’s an elegant blockchain implementation and formidable competitor to Bitcoin. In fact it’s better than Bitcoin in a lot of ways. It’s faster, more secure, offers more privacy, scales better, and it solved the governance problem through voting mechanism via Masternodes. No wonder it skyrocketed to third position. So I had to make a quick decision whether to jump in the Dash bandwagon or just let it pass. To make matters complicated, I didn’t have money to make a significant investment in Dash. The price had already spiked to $45. My solution? I’ve decided to make an epic hedge by collapsing the quantum state of my Ethereum presale coins. I used a portion of my Genesis block Ether to buy 1,000 Dash and set up a Masternode. I’m now a proud member of Dash community. May the better payment system win. see Amanda’s propaganda.

Investing in cryptocurrencies is not for the faint-hearted. There are thousands of altcoins out there that are being pumped and dumped by people who want to make a quick buck. It could be fun and profitable to play that game if you have the time, patience, and luck. It’s no different than picking an IPO stock. It’s pure ole gambling. Therefore, I find it useful to view it as a horse race. In other words, I just placed a bet on my “trifecta.” I call it my Cryptotrifecta — Bitcoin, Ethereum, Dash. May the best blockchain win.

Then again, the reason it’s called a trifecta is because I’m betting that ALL three will end up as winners. Bitcoin has the first mover advantage and network effect. It has the most developers, most investments, and has been tried and tested all these years. It’s on its way of becoming the TCP/IP of blockchain. In terms of market cap, Bitcoin is the tide that lifts all cryptos. Ethereum is on a level of its own. It’s not in direct competition with Bitcoin. I believe that it will dominate the Enterprise blockchains in the coming years. As for Dash, it has a potential to directly compete with Bitcoin to be the “killer payment system app.” It has a good chance of succeeding if its developers continue to innovate fast and furious with flawless execution. It has a passionate community and effective branding and marketing strategy. If Dash Evolution delivers on its promise then Dash could end up as PayPal on the blockchain.

I jumped into cryptocurrencies because of the technological promise of the blockchain. Indeed, my Cryptotrifecta is a big gamble. Good thing I’m a hodler not a trader. At the end of the day, when all is said and done, I have a good feeling that I’ll be a happy camper.

UPDATE 03/10/2017:

The long wait is over. SEC rejects the Winklevoss Bitcoin ETF. Too bad for the Winklevoss. Bad move by the SEC. As expected, there was a buying/selling frenzy and the price of BTC dropped like a rock. But it rebounded after the initial drop. It’s a buying opportunity for hodlers. I actually bought a few more Bitcoins. As Warren Buffett said, “…be greedy when others are fearful.” So there. Good thing my CRYPTOTRIFECTA is resistance to government attacks. LOL. TO THE MOON!